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The president of the company you work for has asked you to evaluate the proposed acquisition of a new chromatograph for the firms R&D department.
The president of the company you work for has asked you to evaluate the proposed acquisition of a new chromatograph for the firms R&D department. The equipment's basic price is $140,000, and it would cost another $35,000 to modify it for special use by your firm. The chromatograph, which falls into the MACRS 3-year class, would be sold after 3 years for $49,000. The MACRS rates for the first 3 years are 0.3333, 0.4445 and 0.1481. Use of the equipment
- What is the Year 0 net cash flow? If the answer is negative, use parentheses. $
- What are the net operating cash flows in Years 1, 2, and 3? Do not round intermediate calculations. Round your answers to the nearest dollar.
Year 1 | $ |
Year 2 | $ |
Year 3 | $ |
- What is the additional (nonoperating) cash flow in Year 3? Do not round intermediate calculations. Round your answer to the nearest dollar. $
- If the project's cost of capital is 13%, should the chromatograph be purchased? -Select-YesNo
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